Estate Planning FAQs

Buying a home and starting a family meant that I was officially an adult. What I did not realize is that being an adult also meant that I had to start estate planning. Thinking about death is scary, but I needed to know that my family would be fine if something happened to me. Working with an attorney, I quickly realized that estate planning was far more than just creating a will. It was planning for my family's future. I started this blog to help others with their estate planning. Even if you have already started, there are some tips that could be useful to you.

Work In Public Relations For A Publicly-Traded Firm? How Can You Avoid Inadvertent Securities Violations?

Posted on:
21 October 2015

If you work in the public relations division (or are the public relations division) of a company regulated by the U.S. Securities and Exchange Commission (SEC), you likely spend most of your time managing your company's press coverage -- scheduling interviews, responding to negative reports, and issuing press releases. As a company that depends in part on the purchase of stock to succeed, your employer likely also expects you to periodically provide statements that convey a positive message to potential investors. However, certain statements you may make in your line of work could subject you to securities fraud charges if they are found to have induced investors to buy your company's stock under false pretenses. Read on to learn about some of the guidelines you'll want to keep in mind when making any public statements that could entice members of the public to invest in your employer.

What types of statements can subject you to charges from the SEC?

SEC Rule 10b-5 governs deceptive practices in the purchase, sale, or marketing of any security -- including a company's stock. This rule specifically prohibits an individual from directly or indirectly employing any "device, scheme, or artifice to defraud" potential investors, making any false statement of fact to potential investors, or failing to make a statement (or correct a misimpression) that could cause an investor to purchase your company's stock.

For example, if your company will be in financial trouble if it fails to secure a lease in a specific location, issuing a press release that falsely conveys that this lease has been obtained could land you in trouble with the SEC if it is found that you had knowledge of this misrepresentation and made the statement in a purposeful attempt to inflate your company's stock value. You could also be charged for making materially false statements related to your company's financial status or the profitability of items it sells.

What should you do to ensure you avoid any securities law violations?

In order to successfully charge you with a securities law violation for statements made as a public relations official, SEC officials will need to establish four factors. First, they'll need to show that manipulation of an individual or the public actually took place. A false statement that is immediately retracted or corrected (or isn't acted upon by anyone purchasing or selling your company's stock) won't be charged. The SEC will also need to show that the fact stated or omitted was important to the investor's decision whether or not to invest. Another crucial factor requires that the misrepresentation has been made "in connection with" the purchase or sale of a security. Finally, the SEC will need to show that you knew (or should have known) that the statement made was false.

One of the easiest ways to avoid any personal liability for a potential securities law violation related to statements made about your company's products or stock value is to ensure you have written documentation backing up the statements, whether in memo, email, or even text format. As a public relations worker, you're not expected to know the intricacies of your employer's fiscal strategies or the ins and outs of each specific product line -- so by having this information in writing from those in the know, you can deflect any responsibility that you purposely or knowingly made false statements of material fact.

However, if your job regularly requires you to make statements specifically related to the health of your company's financials and stock price, you may want to seek the advice of a securities attorney. This attorney can evaluate legal precedent and other cases involving public relations officials to ensure that you don't run into the same pitfalls and that you remain fully protected against any potential liability.